Can I pull out of a property sale or purchase?
26 October 2020
By Conveyancer & Solicitor, Victoria Leech
The simple answer to the question is that you can withdraw or reject an offer on a property at any time up to the exchange of contracts. After exchange of contracts you will have entered into a legally binding contract and you will be subject to the terms of that contract.
Withdrawing before exchange of contracts
If you decide to withdraw or reject the offer before exchanging contracts, you could still have to pay certain charges.
For instance, if you’re the seller you need to check the terms of your agreement with your estate agent. If they have found a buyer who's willing and able to complete but you withdraw the property from sale, you might still have to pay the estate agent's fee.
Whether you're the seller or the buyer, you'll also need to check the terms of their retainer with your Conveyancer. If the Conveyancers have begun work and the sale/purchase doesn't complete, you may be charged by the hour for the work done. Any disbursements incurred by your Conveyancers will still be payable. So for example, if your Solicitor has submitted a request for searches from the Local Authority, you'll still need to cover the cost of those searches.
For people selling leasehold properties, any payments to landlords or managing agents for information will not be recoverable either.
If you are a buyer, you will also be unable to recover mortgage adviser fees or lender valuation fees.
Withdrawing after exchange of contracts
If you change your mind after the exchange of contracts and do not wish to proceed with the sale or purchase, you will be breaching the terms of the contract.
Usually in this instance the party which is not at fault will issue a Notice to Complete. The notice gives the other party a 10 day grace period to complete. They must also pay interest at a daily rate to the side who isn't at fault.
Regardless of which side issues the notice, both sides need to be willing and able to complete within 10 days. If one side is unable to complete, they will still be in breach of the contract, even if they issued the notice and the original reason for non-completion wasn't their fault.
If the buyer fails to complete after exchange of contracts: - The seller is entitled to end the contract and keep the deposit, which is usually 10% of the agreed sale price - The seller can re-sell the property and any contents included in the contract - The seller can claim damages - The seller could claim losses incurred due to market depreciation – so if the value of the property has decreased from the date the contract was breached the buyer has to pay the difference
If the seller fails to complete after exchange of contracts: - The buyer can end the contract and the seller is liable to pay them the daily rate of interest during the Notice to Complete period, along with the original deposit - The buyer has to return any documents received to the seller, at the seller’s expense
If either side fails to complete, the other could sue them for breach of contract in Court and claim for additional losses or for 'specific performance of the contract' (in other words, order them to complete the original sale/purchase).